Recent German Cases, Commentary on Unwillingness to License

The 15/2022 issue of GRUR includes the Judgment of May 12, 2022, OLG Düsseldorf, 1-2 U 13/21 – Signalsynthese II (pp. 1136-45).  (The full text can also be accessed from openjur.de here.)   This is the decision referenced in a June 2022 JUVE Patent article titled Thomas Kühnen won’t dance to the Federal Court of Justice FRAND tune, in which the author stated that (although the court upheld an injunction directed against TCT as an unwilling licensee) the presumed author of the decision, Judge Kühnen, was sticking to his guns following the BGH’s decisions in Sisvel v. Haier I and II (also sometimes referred to as FRAND-Einwand I  and II) in suggesting that the court must examine whether the SEP owner’s offer is FRAND-compliant as long as the implementer manifests a general willingness to license.  The relevant portion of the decision can be found in para. 182.  Also in this issue of GRUR (pp. 1121-25) is an article about the decision by Peter Tochtermann, the Presiding Judge of the Mannheim Regional Court, titled Überlegungen zum Kriterium der Lizenzwilligkeit im Kontext der Verletzung standardessenzieller Patente:  Besprechung von OLG Düsseldorf _»Signalsynthese II^« (“Reflections on the Criterion for Willingness to License in the Context of the Infringement of Standard-Essential Patents:  Review of the Dusseldorf Regional Court’s Decision in Signalsynthese II”).  If I understand correctly, Judge Tochtermann too cautions that only in exceptional cases should the content of the SEP owner’s offer be irrelevant, and he expresses concern that courts should not prematurely conclude that either party is “unwilling” based on negotiations that may begin with the parties very far apart.  He concludes by suggesting that the BGH may further clarify matters in another case now pending before it, involving IP Bridge.

In addition, the issue also includes the decision of the Higher Regional Court of Karlsruhe in yet another SEP case involving TCT, also affirming an injunction.  The decision is the Judgment of February 2, 2022, OLG Karlsruhe, 6 U 149/20 – Steuerkanalsignalisierung II, excerpted at pp. 1145-57 and also briefly discussed on JUVE Patent here. (Full text on openjur.de here.)

Two Recent FRAND Papers

1. Valerio Torti has published a paper titled Worldwide FRAND licences in global patent litigation, 44 EIPR 575 (2022).  Here is the abstract:

A new front has recently emerged in SEP global battles, concerning the legitimacy of judicially determining FRAND worldwide royalties despite the absence of consent of all parties involved. The Unwired Planet decision in the UK, as well as other disputes in the EU and Asia, have given rise to such a new judicial trend in the context of standard essential patents litigation. But should national courts be allowed to embark on a similar comprehensive analysis of the litigants’ global business relationship? After recalling the most recent initiatives adopted at EU, UK and US levels in order to bring more transparency in SEP licensing negotiations, the article will explore the risks and disadvantages of this judicial practice, as also emerged from recent FRAND litigation.

Interesting paper, though the author might have noted that in June the USPTO, DOJ, and NIST withdrew not only the 2019 Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments (as he notes, see  p.579 n.32), but also the Draft Policy Statement on Licensing Negotiations and Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments.  For discussion on this blog, see here and here.

On a related note, see Florian Mueller's recent post Mission accomplished for Avanci: virtually entire automotive industry licensed to 4G standard-essential patent portfolios of 51 licensors--now on to 5G

2. Damien Geradin has posted a paper on ssrn titled FRAND Royalty Rates for 5G Automotive Licensing.  Here is a link to the paper, and here is the abstract:

This paper discusses the licensing of 5G SEPs by automotive manufacturers, which is an issue that is likely to draw considerable attention in the months and years to come. 4G automotive licensing has been a controversial process, which triggered massive litigation before German patent courts by SEP holders. Unfortunately, these courts left open some important questions, limiting themselves to grant injunctions in case of infringement. The granting of such injunctions left major automotive OEMs operating in Germany with little choice but to taken a license from Avanci, the licensing platform created by a large group of SEP holders. This paper discusses the extent to which 5G will transform the automotive industry in the near future or will take some time to develop its full potential. Based on currently available information – it also examines what would be FRAND aggregated royalty rates for 5G automotive licensing.

On a related note, see Florian Mueller's recent post Mission accomplished for Avanci: virtually entire automotive industry licensed to 4G standard-essential patent portfolios of 51 licensors--now on to 5G.

The Italian Supreme Court's Providus Judgment

I mentioned this decision (Providus S.r.l. v. Guibert Express S.a. et al.) earlier this year, following a post on the EPLaw Blog by Giulia Pasqualetto with a link to the decision in the original Italian.  The August 2022 issue of IIC:  International Review of Intellectual Property and Competition Law includes an edited English-language translation of the decision by Marco Bellia.  Providus sued Guilbert and another party, co-owners of EP 1406041 ("Security Device for Puncturable Cartridge").  Providus claimed the patent was invalid, and the defendants counterclaimed for infringement.  The trial court found for the defendants-counterclaimants, and awarded injunctive relief and an award of Providus' profits.  The Court of Appeal affirmed, and the Supreme Court (Corte Suprema di Cassazione) affirms the Court of Appeal.  Specifically, the Supreme Court holds that a recovery of profits under article 125(3) of Italy's Industrial Property Code (IPC) is available even in the absence of (1) proof of compensable harm such as lost profits, and (2) fault on the part of the infringer.  In reaching this conclusion, the court refers to article 125(3) as introducing "a sui generis remedy, of a restitutory nature, inspired by a combined logic, in part compensatory and in part dissuasive and a deterrent."  The court states further that this provision goes beyond what would strictly be necessary to comply with IPRED article 13; the latter requires only that member states take into account, in awarding damages for actual prejudice  caused by a knowing infringer, "all appropriate aspects, such as the negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer," and permits (but does not require) member states to award damages or profits for innocent infringement.  The court rejects the argument that article 125(3) should be read in light of article 158 of the Italian Copyright Law, which more closely tracks article 13 of IPRED.

As I stated in my earlier post on this case, while the Court's decision may well be correct as a matter of statutory interpretation, I think it is problematic (that is, potentially over-deterrent) to award the infringer's profits in the absence of fault.

Zhang on Characteristics of LItigated Patents in China

Huiyan Zhang has posted a paper on ssrn titled Characteristics of litigated patents in weak intellectual property rights regimes: Evidence from China (link here).  This (very interesting) paper is relevant to damages law, as you can see by reading the abstract below.

 

            This paper investigates characteristics of patents involved in infringement lawsuits in weak intellectual property rights (IPR) regimes. Weak IPR regimes usually feature weak patent enforcement, such as relatively low level of compensation to infringement loss or damage awards being capped by an upper bound. I build a dynamic model to show how these low-enforcement features lead to patterns of litigated patents that are not documented in the Western countries. I compile a new dataset comprising 17,331 Chinese litigated patents and their counterparts- 306,898 non-litigated patents. I find that valuable patents are less likely to be litigated than patents with lower values among invention patents while this pattern does not hold among utility models- the type of patents inferior to invention patents. I also document that China’s patent infringement litigation rate is extremely low by international standards, and it has been decreasing sharply over time. Litigated patents tend to concentrate in technological areas and industries in which litigation rates are relatively low in Western countries. These empirical patterns suggest that weak IPR regimes might create a “lemon market” for patent protection in which truly valuable patents are “crowded out” by their counterparts with lower value. Enhancing patent enforcement by eliminating the cap to damage awards might be a feasible solution.